A comparison of the Private Wealth Management Industry in Canada and Singapore
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Transcript of A comparison of the Private Wealth Management Industry in Canada and Singapore
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INTERNATIONAL STUDY TRIP 2016
PRIVATE WEALTH MANAGEMENT
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Stakeholders
• High Net Worth Individuals
• Private Wealth Managers
• Regulatory and Taxation Bodies
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Customers – High Net Worth Individuals
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Customers: Who are you?
HNWI
Business owners/Entrepreneurs Executives, Retirees Multi-Generational
Wealthy FamiliesWidowed Spouses and Beneficiaries
- $1M investable finance
or- Net worth of $3M
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Are you the 1% or 2%?
Canada Singapore
HNWI Population 331,000 107,000
HNWI Percentage 0.95% 1.95%
HNWI Total Wealth US $1 Trillion US $543 Billion
HNWI Average Wealth US $3.02 Million US $5.07 Million
Origin of Wealth Canada, USA, Middle East, South America, China
Singapore, Indonesia, China, India
Global market sizes: Population: 14.65 M Wealth: US $56.4 TrillionsGlobal growth: Individuals: 6.7% Wealth: 7.2%
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Maple Syrup or Dumplings?
Can
ada
• Pros:• One stop shop• Non-residents investing in
Canada• Stable banking• Mostly neutral politics
• Cons: • Budgetary uncertainties
Sin
gapo
re • Pros: • One stop shop• Strict confidentiality• Generous tax incentives • Socio-political stability• Financial hub in Asia
• Cons:• Shortage of Relationship
Managers • High client acquisition costs
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Gimme more!
Asian investors are more aggressive in handling the investments.
Social
Legacy
Intergenerational
Legacy
Wealth Management
Wealth Building
Experience of transition from 1st to 2nd generation wealth
• Asian: Inadequate • Western: Adequate
Source: University of Pennsylvania
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You don’t go where you don’t know!
Western Europe Middle East Latin America North America Africa Eastern Europe Japan Asia-Pacific (excl. Japan)
0%
10%
20%
30%
40%
50%
60%
70%
80%
North America Singapore
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Diamonds or art?
Sports Luxury goods Art Jewelry, gems, watches Others0%
10%
20%
30%
40%
50%
60%
11.60%
19.10% 16.70%
29.20%23.40%
15.80%
19.20%
12.70%
30.20%
22.30%
North America Singapore
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Private Wealth Managers
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Let’s be best friends
Business’ perspective
Create and retain a "book" of clients
Manage assets of (U)HNW* individuals or families
Understand products to create portfolio based on client’s goals
Customer’s perspective
Generate steady income through investment in assets
Deliver performance based on return/risk range agreed
Maximize the invertors’ net worth in the long run
* (Ultra) High Net Worth IndividualsSource: Delloite
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Standard services Tailor-made services
In-person interaction “Anytime, anywhere” (multi-channel)
Quarterly reports Real-time reports
Limited information Regulation and tax transparency
Offshore Onshore
I feel like I know you!
Source: Delloite
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Source: https://geert-hofstede.com/canada.html
We’re not all the same (1/2)
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Power distance
Egalitarian
Hierarchical
Individualism
Individualist
Collectivist
Uncertainty avoidance
Open to new ideas
Very open to new ideas
Long term orientation
Small propensity to save for the future
Supporting long-term
investment
Source: https://geert-hofstede.com/canada.html
We’re not all the same (2/2)
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Power distance
Free information
sharing
Selective information
flow
Individualism
58% look for personal advice
53% look for family advice
Uncertainty avoidance
45% prefer digital than
direct contact
52% prefer digital
contact
Long term orientation
51% look for wealth
preservation
55% look for wealth growth
Source: https://www.worldwealthreport.com/
Culture has an impact!
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Real estate12%
Alternative investment
12%
Equity34%
Cash and cash
equivalents24%
Fixed income
18%Real estate
22%
Alternative investment
13%Equity22%
Cash and cash
equiva-lents27%
Fixed income
16%
Source: https://www.worldwealthreport.com/
For you or for your children?
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Retail banksRegistered investment advisorsFull-service wealth managers
Pure private banks
Investment banks or “one bank”“Independent” private banks
Fund-based advisorsBrokers
Flow playersLocal commercial banks
Source: BCG Perspectives
In what forms and shape do we appear?
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REGULATORY ENVIRONMENT
TREND
MARKET
HIGH
INCREASING
MATURECOMPETITIVE
MODERATE
INCREASING
GROWINGCOMPETITIVE
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Regulators are tough!
OFSI (Office of the Superintendent of Financial Institutions Canada)
• regulates all Canadian federally incorporated financial institutions
• conservative approach • characterized by prudent regulatory
concerns and a focus on investor protection
MAS (Monetary authority of Singapore)
• integrated supervision of financial services and financial stability surveillance
• develop Singapore as an international financial center
• Fraud & Risk management
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And they can’t make their mind up in Canada
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Gimme your money (but not a lot of it)
• Dual taxation –Federal 29% + Provincial
• 50% taxation for HNWI• Double tax treaty with 92 countries• Stable but high tax regime
• Lower tax rate on income – 20 %• Double tax treaty with 79
countries and international conventions targeting money laundering
• Stability of taxation stemming from the stable politics and economy
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Where are we all going?
•TRANSPARENCY
•GROWTH
•CONVERGENCE
•DIGITIZATION
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You wanna know more, and more easily
• Major Events: 2008 financial crisis, Madoff Investment
• More risk averse investor base -> Greater Transparency & Thorough due diligence
• Firms must respond to the new regulatory environment
• more disclosure -> proactive reporting• Investor education -> Powerful client
interface tools
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It’s a dog eat dog world out there
• Rising Cost of Operations • Increased compliance costs• Increased customer acquisition
costs
• Reduced operating margins
• Firms need to enhance offerings to differentiate their services
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So dogs are eating dogs
• Growth through traditional organic strategies is
• Costly • Time consuming
• Industry Consolidation
• Economical, Efficient and Timely Growth
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Then there’s robotic dogs eating the bigger dogs
• Technological advances impacting the entire value chain
• Transforming Client-Advisor Interaction
• Reinventing the Business Model: Reduced costs and New Value creation
• Robo-advisors• Data Analytics